the circle of competence

 Why It's Important to Know Your Limits

Nobody understands the world completely. It's far too complex for a single human brain. Even if you're highly educated, you can only understand a tiny part. Still, that's something-this minuscule patch is the runway you need for take-off, what you need to fulfill your high-flying dreams. If you don't have one, you'll never leave the ground.

Warren Buffett uses the wonderful term circle of compe tence. Inside the circle are the skills you have mastered. Beyond it are the things you understand only partially or not at all. Buffett's life motto: "Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital."

Charlie Munger 

Charlie Munger adds: "Each of you will have to figure out where talent your lies. And you'll have to use your advantages. But if you try to succeed in what you're worst at, you're going to have a very lousy career. I can almost guarantee it."

Tom Watson, the founder of IBM, is living proof of this thesis. As he's said of himself: "I'm no genius. I'm smart in spots-but I stay around those spots.

Be rigorous in organizing your professional life around this idea, because a radical focus on your circle of competence will bear more than monetary fruit. Equally important is the emotional variety. You'll gain an invaluable feeling of mastery and you'll also be more efficient, because you won't have to decide every time whether to accept or refuse a task. With a sharply delineated circle of competence, unsuitable but irre sistible requests suddenly become resistible. 

Crucially, you should never step outside your circle of com petence. 

Many years ago a wealthy entrepreneur offered me a million euros to write his biography. It was an extremely tempting offer. I turned it down. Biographies lie outside my circle of competence. A top-notch biography requires endless conversations and meticulous research. It demands other skills besides those needed for novels and non-fiction-skills I do not possess. I would have spun my wheels, got frustrated, and, most importantly, written at best a mediocre book.

In his far from mediocre book Risk Intelligence, Dylan Evans describes a professional backgammon player by the name of J.P. "He would make a few deliberate mistakes to see how well his opponent would exploit them. If the other guy played well, J.P. would stop playing. That way, he wouldn't throw good money after bad. In other words, J.P. knew some thing that most gamblers don't: he knew when not to bet." He knew which opponents would force him out of his circle of competence, and he learned to avoid them.

Alongside the impulse to step outside your circle of com petence is the equally powerful temptation to broaden it. This temptation is especially great if you're successful within your current circle, if you're entirely comfortable there.Resist it.

Skills are not transferable from one field to another.

In other words, skills are domain specific.

A master chess player isn't automat ically going to be a good business strategist. A heart surgeon isn't automatically a good hospital manager. A real-estate speculator isn't automatically a good president.

So how do you create a circle of competence? Clicking around on Wikipedia isn't enough. Nor is a traditional degree. It takes time-lots of time. "Expect anything worthwhile to take a really long time" is the rule American designer Debbie Millman sticks to (with great success).

 It also takes obsession.Obsession is a kind of addiction, which is why it's often spoken of disparagingly. We read about young people getting addicted to video games, to TV series, to model airplanes.

 It's high time we framed obsession more positively. Obsession drives people to invest thousands and thousands of hours into something. As a young man, Bill Gates had an obsession: programming. Steve Jobs: calligraphy and design. Warren Buffett first put his pocket money into stocks and shares as a twelve-year-old; he's been addicted to investing ever since. Nobody today would say that Gates, Jobs or Buffett wasted their youth. Quite the contrary: it's because they were so obsessed that they invested the thousands of hours it takes to achieve mastery of something. Obsession is an engine, not engine failure

The opposite of obsession, by the way, isn't aversion but "interest" a polite equivalent to saying "I'm not really that interested." 

Why is the circle of competence such a powerful idea? What's its secret? Simple. A brilliant programmer isn't just twice as skilled as a good one, nor three times or even ten times; a brilliant programmer would solve the same prob lem in a thousandth of the time it would take a programmer who was merely "good." Ditto for lawyers, surgeons, design ers, researchers, salespeople. Inside versus outside the circle of competence-we're talking about thousandfold differences.

Here's the other thing: the idea that you can make life stick to a plan is an illusion —-

Chance tears through everything, sometimes with the force of a hurricane. There is only one place where it dwindles to a gentle breeze, and that's inside your circle of competence. You might not find it plain sailing even there, but at least the waves will allow you to navi gate properly. In more prosaic terms, within your circle of com petence you're protected to a certain extent against illusions and fallacies. You could even risk breaking with convention, because you have the necessary lie of the land and can predict roughly what's going to happen.

The upshot? Stop beating yourself up over your deficiencies. If you've got two left feet, forget the salsa lessons. If your kids can't tell whether that squiggle is supposed to be a horse or a cow, stop dreaming of a career as an artist. If you can barely cope with a visit from your aunt, drop the idea of opening your own restaurant. The truth is that it's completely irrelevant how many areas you're average or below average in. What matters is that you're far above average in at least one area-ideally, the best in the world. Once that's sorted, you'll have a solid basis for a good life.

A single outstanding skill trumps a thousand mediocre ones. Every hour invested into your circle of compe tence is worth a thousand spent elsewhere